Tuesday, May 19, 2009

[Investors Please Listen] Vodafone Essar Adds 93% New Users To Parent Group

INDIA'S Vodafone Essar stole the thunder in the quarterly results of its UK-based parent Vodafone Group, accounting for 93% of new user additions and confirming its status as one of the few bright spots in the empire of the world's largest mobile operator.
    Vodafone, which has operations in over 30 countries and is the world's largest cellphone operator by revenues, added 8.4 million net new users during the January-March quarter, of which the Indian unit accounted for 7.9 million.
    Its Indian arm, the country's second-largest mobile operator by revenues, and in which it holds a 67% stake, also saw revenues jumping 40% to $791 million in the quarter, and now accounts for more than 45% of Vodafone's global traffic.

    "Asia-Pacific and Middle
East revenue growth went up 32.3%, driven by India. In contrast to Europe, results in Africa and India remained robust, driven by continued but lower GDP growth and increasing penetration," the company said in a statement on Tuesday.
    Vodafone Group doesn't disclose profits by country, and Vodafone Essar, in which local conglomerate Es
sar owns the remaining 33% stake, is an unlisted entity.
    India, the world's largest growing mobile telephony market, had added around 45 million mobile phone users in the last three months. Vodafone Essar had 68.8-million users on its network at the end of the quarter. Market leader Bharti Airtel has 96.6-million subscribers as on March 31, after it added 8.4-million new users during the quarter.
    India also accounted for a fourth of Vodafone's invest
ments — £1.4 billion — during the last year, and the group said it was committed to making higher investments in India during the current fiscal.
    In its guidance for the year ahead, Vodafone said India and Africa were the only bright spots across its operations as it indicated challenging operating conditions in its
mainstay European markets. The International Monetary Fund (IMF) had forecast a 4% decrease in GDP in this region.
    "Revenue growth in emerging markets, in particular India and Africa, is expected to continue as we drive penetration in these markets," the company said.
    The company said its roaming revenues in India had picked up in the January-March quarter, albeit at a lower rate, after the terror attacks in Mumbai and the economic slowdown resulted in fewer people travelling in the preceding quarter.
    "Lower effective rates per minute, reflecting price reductions earlier in the year, coupled
with the continued market shift to lifetime validity prepaid offerings, led to a reduction in customer churn. Customer costs as a percentage of revenue decreased, benefiting from economies of scale," the company said.
    There were a few blips in the India story too. The average revenue per user dipped 21.7% to Rs 274 in March 9 compared with Rs 350 dur
ing the corresponding period last year. On a quarter-onquarter basis, it fell 7%.
    In comparison, India's largest telco Bharti Airtel saw a 6% dip to Rs 305 in March 9 on a quarter-on-quarter basis. Vodafone said the slight fall in usage per customer was mitigated by net customer additions, which averaged 2.1 million per month for the whole of last year, and the launch of services in seven new circles.


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